Fresh bull run in economy

5 themes for a portfolio to bet on bounceback in the economy

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Top five themes which our analysts think can pick up momentum as and when the economy picks up momentum:

  • The midcap theme could do better: Midcap and smallcap stocks are usually seen as proxies to economic recovery.
  • NBFCs are creating a huge opportunity: Investors can look at the NBFCs for regional franchises with good balance sheets
  • Auto stocks good for proxy to growth: strong demand for auto stocks, we belive that run has been very good and valuations being where they are.
  • Private sector banks better placed: Shares of banks or financials are seen as a proxy for growth in the domestic economy. A bounce back in growth could lead to an increase in credit.
  • Domestic cyclials: cyclicial stocks, or economy- related stocks, are better positioned to ride the recovery the earnings momentum could be better in domestic cyclicals as demand for goods and services increases.

Green shoots are visible in some of the sectors, which are likely to show more traction as the economy picks up momentum possibly by FY17.


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